In his most recent book Giving, former President Bill Clinton emphasizes the good that can be done through charitable actions. He ends by saying “there’s a whole world out there that needs you…give”. One way to meet this challenge is to consider creating a planned gift. Contrary to popular opinion, one need not be a Kennedy or Rockefeller to make a planned gift – anyone, even those of modest means, can designate money or property to a cause that is important to them. A planned gift can either be a percentage of your net worth, a specific piece of property, or a specific dollar amount. Additionally, planned giving allows a person to make a gift either during life or at death, creating flexibility if your financial situation is uncertain.
Some types of planned gifts reduce the size of your taxable estate or generate a charitable deduction if made during your lifetime. Beyond possible tax breaks, a planned gift is a way to leave a legacy by supporting and nurturing a cause that you value. There are numerous tools by which a planned gift can be made. Before taking any action, it is advisable for you to consult with your attorney, tax advisor, and/or accountant. Here are a few of the most common instruments:
A Bequest in a Will -- Allows you to name a charitable organization or cause in your will. Please note that it is possible to amend an existing will to include a charitable organization. Here are three examples of possible bequests:
· I leave $1,000 to Charity X.
· I leave 10% of the residue of my estate to Charity Y.
· I leave any automobile I own at the time of my death to Charity Z.
Life Insurance Policy -- You could name a charitable organization as either a primary, secondary, or final beneficiary of a current policy. Or, you could purchase a new policy naming a charity as the beneficiary.
Charitable Remainder Trusts – Allows you to transfer ownership of property you have to the trust. You can be a beneficiary now, and upon your death the remaining balance is paid to the charitable organization. These are commonly used by people who have held mutual funds, stocks, or real estate for a long period of time because of tax planning advantages.
Charitable Gift Annuity – Is a contract between you and a charitable organization. You agree to make a gift to the charity and in return, the charity agrees to make income payments to you for the rest of your life or a set period of time.
Beneficiary of a Retirement Plan – Gives you the option of listing a charitable organization as a beneficiary, either primary, secondary, or tertiary. For example, you may wish to leave 10% to Charity Y.
Many of us have a non-profit, educational institution, or religious community that is dear to our hearts. With a little thought and planning, you have the potential to leave a gift, promoting that organization even after you are gone. Ask yourself, “Can I amend my will to leave ten percent of your assets to your college? Would the library like to receive your books for its book sale fundraisers? Is there a family member whom you would like to create a scholarship in memory of?” Whatever it may be, you’ll discover that planned giving is for everyone, and that it is a gift that keeps on giving.